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somwone help me with these problems with step by step explnation ! 28. Consider a T-bill with a rate of return of 5 percent and

somwone help me with these problems with step by step explnation ! image text in transcribed
28. Consider a T-bill with a rate of return of 5 percent and the following risky securities. From which set of portfolios, formed with the T-bill and any one of the 4 risky securities, would a risk averse investor always choose his portfolio? Security A: E(T) = 0.15; Variance = 0.04 Security B: E(I) = 0.10; Variance = 0.0225 Security C: E(I) = 0.12; Variance = 0.01 Security D: E(T) = 0.13; Variance = 0.0625 A) B) C) D) The set of portfolios formed with the T-bill and security A. The set of portfolios formed with the T-bill and security B. The set of portfolios formed with the T-bill and security C. The set of portfolios formed with the T-bill and security D. 29. A stock pays no dividends for the first 3 years and then pays a dividend of $3/share for ever. Discount rate is 10%. Currently the stock is trading at $20 in the market. Which of the following is TRUE? A) The investor should buy the stock since it is undervalued in the market B) The investor should buy the stock since it is overvalued in the market C) The investors should not buy the stock since it is undervalued in the market D) The investor should not buy the stock since it is overvalued in the market 30. Diversification works because 1) asset returns are not perfectly positively correlated. II) placing stocks into a portfolio guarantees a positive real return. III) market risk can be dramatically reduced if not eliminated. A) I only B) II only C) III only D) I and

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